Last week Co-Liv had the honor of sponsoring The Urban Developer Co-Living & Build-to-Rent vSummit based out of Australia, but attracting panelists and participants from across the world. The Urban Developer has made quite a name for itself as being an excellent host of Real Estate events and this vSummit was no exception. The seven panels consisted of an extremely impressive list of speakers including global real estate directors, coliving CEOs, and architectural design experts among others. Many Co-Liv members had the chance to attend the event and we’ve put together our biggest takeaways below.
Build-to-Rent vs. Coliving
As noted in the title of the vSummit, the content of each panel focused on the emerging real estate trends of Build-to-Rent (BTR) and coliving in Australia as well as around the world. One of the most popular questions of the day was “is there a tangible difference between BTR and coliving, and if so, what is it?” Nearly all the panelists agreed that there was a tangible difference and attributed it to average stay, spatial design, and target market. The below graphic from a presentation by Conal Newland, Australian National Director at Savills, summed up the differences between student housing, coliving, and BTR.
Coliving Markets Around the World
One of the most impressive parts of the vSummit was the global perspective brought by the Real Estate professionals from Australia, Asia, Europe, and North America. While it would be impossible to share all the insights here, we’ve captured some of the high-level takeaways from the coliving industries in each of the mentioned regions.
In the first session of the day, Conal Newland from global Real Estate firm Savills gave an in-depth picture of the coliving & BTR industries in Australia. For the most part, the living trends that have fueled the coliving movement around the world are also pushing demand for coliving in Australia. Conal mentioned the average married age in Australia has risen dramatically over the past two decades: from 26 to 29 for females and from 28 to 32 for males. Similar to large cities across the world, Sydney and Melbourne have also seen soaring property prices that have far outpaced the wage growth in those areas resulting in a sizable housing affordability problem.
In light of these trends, the BTR and coliving pipelines in Australia have continued to grow with over 7,500 BTR apartments and over 1,800 coliving units completed, under construction, or in planning.
Nicholas Wilson, Head of Capital Markets Research at JLL APAC, provided a great overview of what’s happening in the coliving scene across Asia. He started off by mentioning that China and India are executing coliving on a scale that is much, much larger than the rest of the world. In India, for example, there are some coliving operators that already have 30 to 50 thousand beds in operation. While most of the Indian companies are backed by venture capital, in China some of the biggest players in the industry are linked to major developers or even state-owned enterprises that have an “immense amount of capital” behind them. Across the rest of Asia, Japan has the most established BTR market (where some operators have rebranded to coliving in the past 12 months) while Singapore and Hong Kong are home to the majority of other coliving operators that are looking to expand across the region. Nicholas mentioned that many of the ‘asset-light’ coliving operators aim to form joint ventures with large Real Estate developers in their target markets in order to establish a “programmatic pipeline of projects.”
UK / Europe
The second session also had Richard Lustigman as one of the panelists, the Director of Living Capital Markets & Coliving at JLL UK/Europe. Richard mentioned that coliving in the UK has grown rapidly in the past three years to have over 2,000 beds in operation and more than 17,000 in the pipeline over the next two to three years. Institutional capital in the UK, similar to many other countries across Europe, is “in the wings, waiting and watching” and seriously paying attention to coliving as an emerging asset class. Richard did confirm that urban affordability is a driver of coliving demand in the UK, but he believes that higher density living solutions are a bigger driver in dense urban areas like London where space is at an absolute premium.
USA / North America
Susan Tjarksen, Managing Director of Multifamily Capital Markets at Cushman & Wakefield (and author of the groundbreaking Survey of the Coliving Landscape 2019 report), joined the second panel session and from the start made no doubt that “coliving is an established asset class in the US.” Across the country Susan confirmed that over 15,000 beds are currently in operation and another 22,000 beds will be delivered in 2020 and early 2021. As is the case in Australia, Europe, and across Asia, nearly all of the beds are currently concentrated in “gateway markets” such as New York, Los Angeles, San Francisco, Chicago, DC, etc. Susan mentioned that post pandemic there will be an even higher demand for “synthetically affordable housing,” meaning rent that can be afforded by those making 60–100% of Area Median Income (AMI). This should drive the demand for coliving units even higher as people look for more affordable options in the wake of the current economic downturn.
Coliving Case Studies
By far one of the most interesting sessions of the day was hosted by representatives from three coliving operators in Australia: Hmlet, OpenDoor, and UKO Coliving. Each company had the chance to describe their current footprint and future expansion plans in Australia and we came out of the session feeling confident in the robustness of the Australian coliving industry moving forward.
Chrystan Paul, the Director of Investment for Australia and New Zealand at Hmlet, gave a fantastic presentation on Hmlet’s current operations in Australia, highlighting one of their best properties located in St. Peters, Sydney. Hmlet currently operates over 1,700 beds across Singapore, Hong Kong, Australia, and Japan and has another 2,500+ in the pipeline in those markets. The St. Peters location houses 82 beds split between two wings of the building that are connected by a beautiful 300 square meter outdoor communal courtyard area.
Perhaps the most impressive part of St. Peters was that the location officially opened November 23, 2019 and incredibly was fully leased up by February 15, 2020. Such a rapid lease up period bodes well for other coliving locations in Australia as it appears the demand is extremely strong.
Another impressive coliving operator to present during the vSummit was OpenDoor. Graham Zink, OpenDoor’s APAC President, outlined the company’s current operations in the Western US and plans to launch in Canada, Singapore, and several cities across Australia (Brisbane, Melbourne, & Sydney). With around 12,000 beds in the pipeline, OpenDoor is projected to grow exponentially over the next few years focusing on larger developments with a minimum of 150 beds. Graham shared that currently OpenDoor’s average tenant tenure is incredibly standing at 2.6 years, which is the highest number I’ve heard for any coliving operator. The presentation also covered OpenDoor’s “community pod” spatial design model that consist of 8 to 18 private rooms sharing a communal kitchen and living space. Graham mentioned the size and design of these pods has been through several iterations and refined to the size that OpenDoor believes will facilitate the optimum social dynamics.
Last but certainly not least was a presentation from Rhys Williams, the extremely well-spoken Co-founder of UKO Coliving. Currently, UKO has 160 micro-apartments in operation with 345 more in the pipeline. It was clear throughout the entire presentation that UKO has a laser focus on creating great communities through understanding consumer needs and intentional design. Rhys summed it up quite simply when he said, “coliving has to work to enhance the life of a customer, rather than make it harder.” UKO coliving sees communities of around 50 people to be their magic number in order to facilitate the best social interactions between their customers. Eventually, UKO hopes to create an “ecosystem” of communities in each city in order to give residents the ability to easily move between the properties if they so choose.
Developing and Learning from Coliving
In order to truly get a wholistic view of the coliving and BTR ecosystems, the Urban Developer also brought in several experts from adjacent industries such as Spatial Design and PropTech. Two of these speakers were Co-Liv’s very own Christian Schmitz (Head of Technology) and Kelsea Crawford (Co-Liv French Ambassador) who spoke about their work supporting the global coliving movement working at their respective companies, Salto Systems and Cutwork. Below we’ll take a look at how several of the panelists proved that technology and spatial design are crucial ingredients to drastically improve the coliving experience.
Two of the panelists that spoke about how coliving can benefit from PropTech were Christian Schmitz from Salto Systems and Tom Welsby from Resvu. Christian described how Salto has been providing “keyless access control solutions” to a variety of verticals since 2001 and he is a strong believer that the coliving and BTR industries can benefit immensely from a consolidated building access system. Using a connected and centralized access system allows coliving operators to have complete control over who has access to what parts of the building at all times. In times of Covid-19 the advantages of such a system are quite obvious as the operator can easily limit access to common areas such as gyms as well as easily ensure that only residents are allowed access to the building at all times.
Tom Welsby also made a compelling case that utilizing Resvu’s resident engagement and facilities management technology can meaningfully improve the operational efficiency of coliving locations. Through their community app, Resvu focuses on creating a tenant front end engagement experience, a user-friendly back end platform for operators to use, as well as high level data analytics to analyze how each community is functioning. For Tom it all comes back to using technology and the insights that can be drawn from user data to ultimately improve the way the community members interact with one another, whether it’s tenants living in the same building or other community partners such as the local laundromat or yoga studio.
Coliving Spatial Design
Spatial design was talked about at length during the entire conference, particularly as a way to distinguish between coliving and BTR. Most panelists agreed that BTR spatial design is very similar to traditional apartment layouts while coliving spatial design has seen many different iterations that typically tend to reduce private space while increasing shared space. James Pearce, Director at design firm Fender Katsalidis, recognized the difficulty of designing coliving floor plans in an era when consumer preferences are changing so rapidly. At the end of his panel session James wrapped up his design philosophy quite nicely: “Build the bones of the building to absolutely last, but internally we are experimenting and as time goes by we might adjust and adapt and reconfigure to keep it relevant and keep it modern.”
Kelsea Crawford, CEO at French design firm Cutwork and French Co-Liv Ambassador, shared some of her expertise in designing coliving spaces as well. Kelsea mentioned that Cutwork is focused on design projects that implement new ideas of how to live and work, which was very evident in the firm’s involvement in designing Station F, the world’s largest startup accelerator. Some of Kelsea’s most interesting insights were around the ideal “cluster size” for coliving buildings, a number she believes should be between 8 and 18 people in order to facilitate the best community possible. Speaking about coliving as an overall movement, Kelsea stated “one of the promises of coliving is to not just make bubbles of the same demographic of people, but to bring people from a diversity of backgrounds to live together.” If coliving buildings are designed and operated in an inclusive way, they can bring together a diverse set of people that can also be intentionally integrated into the surrounding neighborhood. Like James, Kelsea is also confident in the future of coliving design as she believes “we’ll continue to learn, we’ll continue to iterate, and it will become the version that it needs to be.”
The last session of the vSummit was a “helicopter view from the industry heavyweights” that brought in an impressive list of panelists:
- Chris Key — Managing Director at Greystar Australia
- Adam Hirst — General Manager BTR at Mirvac
- Mark Fischer — Managing Director, Global Head of Real Estate at Qualitas
- Kris Daff — Managing Director at Assemble
All four panelists commented on how tricky navigating the Australian BTR and coliving markets can be, but all expressed long-term confidence in the resiliency of the sectors. When asked about how the pandemic might affect the Australian market long-term, both Chris and Kris mentioned that residential assets are particularly resilient during crises. Additionally, Mark predicted that the current housing supply shortage in Australia will only worsen due to the pandemic, which will increase the attractiveness of BTR and coliving and perhaps cause institutional investors to get involved earlier than anticipated. At Mirvac, Adam actually has a large BTR project under construction that will be completed in six months’ time. Despite the crisis, Adam is confident the building will be rapidly leased up and will serve as a great indicator for the rest of the market that the BTR model in Australia is here to stay.
Hopefully this event recap has been as interesting and informative as the actual vSummit! As mentioned, The Urban Developer did a fantastic job planning and executing the conference and Co-Liv is very appreciative for the opportunity to have been a part of such a great event.